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April 9, 2007 8:00 AM, EDT
Tire Makers Raising Prices
Manufacturers Cite Higher Material Costs

By Frederick Kiel, Staff Reporter
This story appears in the April 9 print edition of Transport Topics.

At least five major tire manufacturers said they are raising prices on their medium- and heavy-duty truck tires by 3% to 5%, with most citing the rising cost of raw materials as the reason.
Goodyear Tire and Rubber Co., Bridgestone Firestone North American Tire Co., Continental Tire North America and Yokohama Tire Corp. all said they would raise prices on their commercial tires by up to 5% on May 1.

Cooper Tire and Rubber Co. already raised its prices on commercial tires by up to 3% on April 1.
“Price increases on any major component like tires make it more expensive for our customers to do business, because we pass the increases along to them,” Roy Wiley, spokesman for International Truck and Engine Co., told Transport Topics. “The cost of doing business just keeps rising.”
No other truck manufacturer contacted had any immediate comment on the price increases.
Earlier, International said that it would begin offering DoubleCoin tires from China as a lower-priced option on its new trucks beginning Jan. 1, the first OEM to offer a Chinese tire on a new truck.
DoubleCoin executives did not return calls requesting comment on their current pricing policy.
A spokeswoman for Michelin USA, Lynn Mann, said the Greenville, S.C.-based company has not raised prices on commercial tires since August, when the prices were increased by up to 5%.
Susan DeVene, executive assistant in the sales and marketing division at Cooper, told TT on April 4 that the company contemplates no further price increases this year.
Tire costs rank as the third-largest operational expense for trucking companies, behind fuel and labor (8-22-05, p. 1). According to tire manufacturers, tires account for about 22% of a fleet’s maintenance expenses.
“The price of crude oil, the main raw material in tires, has gone up a lot and shows no signs of dropping any time soon,” Kevin Rohlwing, commercial tire analyst at the Tire Industry Association, said. “That is the main reason why manufacturers have had to raise prices.”
Rohlwing said that DoubleCoin’s entry to the U.S. market “would have little effect in the short run on the tire market.”
“The top three [Goodyear, Bridgestone and Michelin] control over 70% of the market,” Rohlwing said. “It will be extremely difficult for any newcomer to get even a tenth of the market. DoubleCoin does offer a low-cost alternative for the first time to fleets and especially to owner-operators who may have only $500 in his pocket.”
Bridgestone Firestone, in a March 30 statement, said it would increase prices on the company’s Bridgestone, Firestone, Fuzion and private brand tire lines in North America.
“The announced increases, generally up to 5% on passenger and light truck, truck and bus, and agricultural and off-the-road tires, with possible specific in-line adjustments in excess of 5%, will affect the replacement, original equipment and export channels,” the statement said. The price increases are scheduled for May 1.
Asahiko Nishiyama, Bridgestone Firestone president, said in the statement, “The continuing upward spiral of raw material costs makes this action necessary. This unprecedented situation is simply not one that can be managed through the enhanced efficiencies and increased productivity.”
Ed Markey, Goodyear’s spokesman, told TT April 4 that the company would raise its commercial vehicle tire prices by up to 5%, beginning May 1. “The main reason is the price increase in raw materials,” he said.
Markey said the Goodyear price increase affected only commercial tires and not auto tires.
“Goodyear’s last price increase on commercial tires went into effect in August of 2006, with a 4% increase,” Markey said.
Continental said April 5 it would raise prices for its medium- and heavy-duty Continental, General, Semperit and private brands by up to 5% on May 1. Continental said its last price increase on commercial tires, on Oct. 15, was also at 5%.
In 2005, the latest year for which statistics are available, Goodyear had 27% of the medium- and heavy-duty truck tire market; Bridgestone, 25%; Michelin, 21%; Continental, 7.5%; Yokohama, 4.5%; Toyo, 3.5% and Sumitomo, 3%.
Yokohama Tire Corp. said on April 5 that it would raise the price of its commercial tires by up to 5% on May 1.
“Long-running increases in raw material and transportation costs have caused Yokohama Tire Corp. to adjust prices of its commercial truck and bus tires, effective May 1,” a company statement said.
“An increase of up to 5% in the price of truck and bus tires has become unavoidable and necessary to equalize the soaring costs,” said John Cooney, Yokohama’s director of commercial sales.
Toyo Tires said April 2 that it will raise prices on its tires for passenger cars, light trucks and off-road vehicles by up to 7% on May 1, but it has not yet decided to raise prices on commercial tires.
Sumitomo, which produces mainly medium-duty tires, did not respond to questions about its pricing plans.